An Investigation of the Demand for Digital Currency (BITCOIN) Using Panel Data

This study presents a statistical model for the functional response of the global demand and supply for the digital currency (especially BITCOIN) based on pane data approach. The currency and its responsibilities are investigated in a broad sense. In the next step, the evolution of the monetary systems with the emergence of digital currency in last decades is investigated based on some of the large-scale economic variables that play major role on the demand for currency of any sort. The study then continues based on the assumption that a digital currency can function like a regular currency, and introduces the BITCOIN as an example of well-known and most controversial digital currency circulating in the monetary systems. Based on a panel data approach to Kaynes monetary theories, the functional demand for the BITCOIN is then investigated. The study shows that there is a positive correlation between the demand for the BITCOIN and national income. Study also shows strong negative corresponding correlations for the interest and inflation rates. These observations well aligns with the assumptions of Kaynes general theory and clearly reveals that in addition to trade, there are commercial motivations behind the development and adoption of the BITCOIN.